International Developments: BankID

As part of our work to monitor and interpret international developments, we recently spoke to Jonas Dahlberg, Vice President of Business Development at Nexus Group, to gain his insights into how Sweden’s BankID works and why he thinks so many people have joined the voluntary identity framework.

Nexus Group builds services on top of the popular BankID, allowing companies, banks, and government agencies to authenticate individuals over the internet.

What is BankID?

BankID is a digital identification solution. It provides a secure way for users to authenticate themselves online and is accepted across a range of organisations including banks and government services. It was developed collaboratively by a number of large banks in Sweden in 2003.

Basically, you can think of it as an electronic identity document, similar to a passport or drivers licence, which lets you prove who you are online. More than two thirds of Sweden’s population is on board – about 6.5 million people. BankID is currently the leading electronic identification scheme in Sweden.

With such a high uptake – what benefit does BankID have for consumers?

BankID makes managing digital interactions safer and easier for users. The user only has to remember one login, which can be used across many organisations. It’s much more convenient than remembering multiple passwords and usernames. It’s also much safer for users as their personal information is not stored by multiple organisations; the added security is a huge benefit.

Users can access a range of online services from a range of different organisations using their BankID – online and mobile banking, e-trade, and tax services to name a few.

How does BankID support online commerce?

Back in 2003, customers needed a swipe card and a card reader plugged into their computer to make online transactions. Today, people simply use a mobile or online application. Initially BankID focused on enabling access to financial institutions’ online banking services, however, as the technology advanced, third party suppliers extended use of the identification scheme to other services – for example:

When making online purchases, the delivery address and banking details can be retrieved from the BankID scheme – the consumer doesn’t need to enter the information manually.

Documents can be digitally signed using BankID credentials for authentication

Payment can be made to a BankID via phone number or email – the payer doesn’t need to know the payee’s account number

What’s next?

In the near future, corporate building access may be granted through a customer’s BankID.

Last month, the UK government published a consultation paper on “Opening up UK payments”. According to the paper, “the self-regulation of financial services…has been discredited.” Say what? The world over, payments systems have been almost entirely self-regulated, so this is a big call. The evidence cited in the paper for this includes the LIBOR-rate fixing scandal and the failed attempt to eliminate UK cheque clearing. And of course, there is enduring rancor over the public bailout of UK banks during the global financial crisis.

The new UK Payment Systems Regulator (PSR) became operational on 1 April 2015 and as reported in the most recent edition of Payments Monitor (APCA's quarterly newsletter), released its first major policy statement, entitled “A new regulatory framework for the payment systems in the UK”.
The PSR has laid down a significant agenda. This includes the establishment of the “Payments Strategy Forum” to develop a collaborative industry strategy and effectively replace the UK Payments Council. The payment system is a network and a strong shared vision and collaborative strategy is critical for success. Collaborative bodies, such as Australia's own Australian Payments Council, recognise the need to have forums that bring industry together. However to be successful, the new Strategy Forum will need active industry participation. If industry is only there to assist in the implementation of public policy, then the new Forum will fall short of expectations.

I recently had the rare and valuable chance to take a deep dive into someone else's payments pool. Such comparisons are always refreshing, not to mention instructive.
The Canadian Government has appointed a Task Force to review the Canadian payments system, and the Task Force has embarked on a series of intensive workshops with senior people from across payments – financial institutions, schemes, corporate and government users, merchants, consumer groups and others. They kindly invited me to participate in a 3-day workshop that ranged widely over the future payments landscape as they are seeing it in Canada. This was, I have to say, an impressive effort.